Halvorsen & Reith

D&O cover gap review in the Dubai International Financial Centre

A D&O cover gap review in the Dubai International Financial Centre tests whether the insurance sitting behind a board actually answers a claim brought under the Centre's own legal system. That is a different question from whether the same policy answers a claim under the law a group's head office cover was written for. The DIFC has its own companies law and its own courts, distinct from the wider United Arab Emirates, so a policy drafted elsewhere can leave gaps once tested there. This review sets out where those gaps typically sit and what a board of directors needs on file before it relies on cover it has not checked.

A group with an operating entity registered in the DIFC often renews its global D&O policy each year without checking whether the schedule actually names the DIFC entity, or whether the wording excludes claims brought in the Centre's own courts. The gap surfaces only when a claim, a regulatory inquiry or a shareholder dispute tests the policy for the first time, by which point renewal has already happened on autopilot for several cycles.

The rest of this page sets out what the DIFC actually requires and what becomes fixed on the local register once cover is treated as adequate. It also sets the boundary of this firm's advisory work in the Dubai International Financial Centre.

What changes in the Dubai International Financial Centre

A company doing business in the Dubai International Financial Centre sits inside a legal system built specifically for the Centre, not inside the general commercial law of the wider United Arab Emirates. Its companies law, its courts and its own regulator apply to the entity registered there. A D&O policy has to be tested against that system directly, not assumed to transfer from wherever the group's head office happens to sit.

Because the DIFC allows full foreign ownership, the board is often made up of directors who are not resident in the country and who may never have tested their personal exposure under the Centre's rules before. A beneficial owner sitting outside the Emirates frequently assumes that a global policy, taken out at group level, automatically extends to the DIFC entity and its directors. That assumption is the first thing this review tests, not the last.

The general mechanics of this review, and how a gap is identified before it becomes a live claim, are set out in the D&O cover gap review overview. What follows here is what actually changes once the entity sits inside the Centre rather than outside it.

The local requirement behind a D&O cover gap review in the DIFC

There is no standalone requirement in the Dubai International Financial Centre to carry out a D&O cover gap review as a discrete filing or compliance step. What drives the work instead is the duty of care and diligence a director owes under the Centre's own company law, a duty that treats an untested assumption about cover as a governance failure in its own right, not merely as an insurance question.

The test a court applies is not whether cover exists on paper, but whether a reasonably diligent director would have relied on it without checking the schedule, the exclusions and the territorial scope against the entity actually registered in the Centre. Director appointment terms drafted for a different jurisdiction, and never revisited once the entity moved into the DIFC, are the most common point at which that reliance turns out to have been misplaced.

Reviewing whether cover responds to a claim is a different exercise from advising on what cover to buy. Arranging or negotiating the placement of insurance for a Centre-registered entity is a licensed activity in its own right, and once an unlicensed adviser has taken that step on a board's behalf, the resulting exposure attaches personally to the individuals involved. It does not lift simply because the policy then renews cleanly the following year.

The same review looks different in England & Wales, where the underlying duty is expressed differently even though the question being tested, whether cover was actually checked rather than assumed, is the same one.

The filing, register and forum consequence

A director's appointment to a Centre-registered entity is recorded on the local companies registry, and that record is the first thing a claimant, an insurer or a counterparty checks when a dispute arises. The register does not show whether cover exists or whether it responds. It only fixes who held office and from what date, which is precisely the fact a policy has to match.

The board's own record matters just as much as the register. A board minute noting that cover has been reviewed and found adequate, kept in the minute book without the underlying policy having actually been checked against the appointment terms, becomes evidence of a decision that was never properly tested. Once that minute is filed, it forms part of the company's statutory filing history and cannot be rewritten. It can only be corrected by a later, better-informed one.

Because the DIFC runs its own courts, separate from the rest of the United Arab Emirates, a dispute over whether a director acted reasonably in relying on cover is generally tested there, under the Centre's own procedural rules, rather than in a forum the group may be more familiar with from elsewhere in its structure.

Where the exposure question turns on how liability is structured across more than one entity in a group, the comparison in Netherlands and BVI director liability sets out how differently two other jurisdictions answer the same underlying question. A fuller account of what to keep on file once a review of this kind is complete is set out in what evidence to keep after a D&O cover gap review.

A board that has renewed cover for several years without testing it against the Centre's own rules is not short of paperwork. It is short of a tested answer to what actually happens if a claim is brought locally, and that gap is cheapest to close before a claim, not after one.

Assess your director exposure. Write to info@hreithlaw.com with the jurisdiction and the structure.

What this service does not include in the Dubai International Financial Centre

This review does not include acting as a director, company secretary, nominee shareholder or trustee for the entity, and it does not include sourcing, supplying or arranging for another person to take on any of those roles. It also does not include arranging or negotiating the D&O policy itself, or any other activity for which a trust and corporate service provider licence, or an insurance intermediary licence, is required in the Centre.

That boundary is set by licensing, not by preference. A firm that steps into placing cover, or into filling a board seat, takes on obligations that sit with a licensed provider, and blurring that line is itself one of the exposures this review exists to catch, not to create.

Advice that moves from identifying a gap in cover into negotiating its replacement with an insurer crosses into a licensed activity in the DIFC. Once that step has been taken by an adviser outside that licence, the exposure is fixed at the moment the placement is agreed, and it is not removed by adding a disclaimer to the file afterwards.

What the review does produce instead:

Where the gap in cover surfaces alongside a wider breakdown between shareholders, the questions overlap with deadlock and separation in the Dubai International Financial Centre, and the two are worth reading together rather than in isolation.

If cover was arranged before the entity's governance was reviewed, and appointment terms were last checked years ago, the safest next step is not a new policy quote. It is a clear statement of where personal exposure actually sits today.

Assess your director exposure. Write to info@hreithlaw.com with the jurisdiction and the structure.

Frequently asked questions

What evidence should the board keep on a D&O cover gap review in the Dubai International Financial Centre?
The record that matters is not the policy alone but the board minute showing that the schedule, the exclusions and the appointment terms were actually compared, not assumed to match. That minute belongs in the minute book alongside the appointment record on the companies registry, so the two can be read together if a claim is ever tested.
What happens if the gap is not addressed?
The exposure does not sit with the company; it sits personally with the director who relied on cover that turned out not to respond. Because the appointment is already fixed on the local register, correcting the position after a claim has been brought is far harder than testing it beforehand.
How often should this review be repeated in the Dubai International Financial Centre?
It should be repeated whenever the policy renews, whenever a new director is appointed, and whenever the entity's activity in the Centre changes materially, not on a fixed annual cycle assumed to be sufficient. A renewal date is not the same as a review date, and treating the two as identical is the most common way the gap reopens.
Does this review change for a foreign-owned company?
The mechanics stay the same, but the starting assumption usually does not: a foreign-owned entity is more likely to be relying on a group policy that was never drafted with the Centre's own courts and company law in mind. That makes the schedule check, not the exclusions wording, the first thing worth confirming.
What does this review require in practice, and does a director have to be resident to be exposed?
No. A director does not need to be resident in the Centre to carry personal exposure under its rules, and treating a non-executive or foreign board seat as a formality is the misconception this review corrects most often. In practice it requires the current policy schedule, the appointment terms in force, and the last board minute recording any review, read side by side.
By Amara Diallo